Gold prices in session; copper down on China investigation worries

SAN FRANCISCO (MarketWatch) — Gold futures settled lower on Friday, but scored a modest gain on the week after a U.S. jobs report largely met market expectations.

“The number is not ‘game changing’” for the U.S. Federal Open Market Committee, said Chris Gaffney, senior market strategist at EverBank Wealth Management. “The taper will continue at the current pace, but rates will remain low in support of the U.S. economic recovery.”

So gold seems to be “’stuck’ in a very narrow trading range — and with no inflation and a slow recovery, we don’t see anything which would propel it higher,” he said.

Gold for August delivery
US:GCQ4
shed 80 cents, or 0.1%, to settle at $1,252.50 an ounce on the Comex division of the New York Mercantile Exchange. Tracking the most-active contracts, prices were up roughly 0.5% for the week.

July silver
US:SIN4
fell 8 cents, or 0.4%, to $19 an ounce, with prices not quite settled for the session. Prices were up about 1.7% for the week.

“After weeks of lackluster trading, the gold community was anticipating a bit more action following the U.S. non farm payrolls data,” said Vedant Mimani, lead portfolio manager of the Atyant Capital Global Opportunities Fund. “The sellers seem exhausted and the buyers seem to be sitting on their hands and waiting.”

“Most of the economic data coming out has been indicating the economy is on the mend and the U.S. nonfarm payrolls data was just another datapoint confirming what the market already knew,” he said.

‘The NFP was the most boring number ever but it does give one message out which is things are not getting worse regardless how you read that data.’
Naeem Aslam, AvaTrade

A surge in new U.S. jobs from February to April marked the best three-month stretch in two years, and that stretch appeared to continue with May data that showed a gain of 217,000. Analysts were looking for a 210,000 jump in nonfarm payrolls in May. The unemployment rate held steady at 6.3%.

“The NFP was the most boring number ever but it does give one message out which is things are not getting worse regardless how you read that data,” said Naeem Aslam, chief market analyst at AvaTrade. “This has triggered some selling pressure for gold but nothing as many thought because if we had a strong number today, the situation would have been very different.”

Central bank influence

Gold prices on Thursday notched their biggest one-day rally in three weeks, after the European Central Bank cut interest rates and announced other easing measures that initially weighed on the euro.

Bloomberg

The “ECB with its mega bazooka could also help inflation in the euro region,” said Aslam. “We do know that whenever inflation picks up, investors want’s to hedge and then they land on the yellow metal, which works very well for this purpose.”

Looking ahead, the U.S. Federal Open Market Committee meeting, set for June 17 to 18, is key, according to Chintan Karnani, chief market analyst at Insignia Consultants, based in New Delhi. “It will be short-term bears versus long-term bulls in gold and silver for now.”

Rounding out action on Comex Friday, July platinum
US:PLN4
rose $7.90, or 0.6%, to end at $1,453 an ounce, about flat for the week. September palladium
US:PAU4
added $4.80, or 0.6%, to $844.25 an ounce, up 0.9% for the week.

High-grade copper for July delivery
US:HGN4
dropped 4 cents, or 1.3%, to $3.05 a pound, losing roughly 2.3% for the week. Prices have been pressured from concerns that an on ongoing investigation into the use of the metal for getting loans held in China’s Qingdao ports may cut into demand. A Deutsche Bank strategist said the probe highlights the risks involved with commodity financing.

Shares of gold and silver miners edged lower Friday afternoon, with the Philadelphia Gold and Silver Index
XAU, -0.01%
down 0.2%, but it was set for a weekly gain of 1.7%. Shares of the SPDR Gold Trust
GLD, -0.23%
lost 0.1%, trading up about 0.1% for the week.

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